Interest when duty is paid by DEPB debit – Board clarifies after one year.

By Vijay Kumar

On 10.4.2006, the Commissioner of Customs, Mumbai-II asked the CBEC for a clarification whether interest is payable when goods are cleared from warehouse and duty is debited from DEPB. Board gave a clarification on 21.07.2006 to him that DEPB is not an unconditional exemption and so interest was payable.

For almost a year, this issue was a private affair between the Board and the Commissioner, but recently the CBEC appears to have realised that there are other Customs Commissionerates in the country, who may also have the same issue.

So by Circular No. 26/2007 dated 20.7.2007, [that is exactly one year after the Board gave the clarification to the Commissioner), CBEC now clarifies for the benefit of all Commissioners that interest is chargeable on duty paid by way of debit in DEPB on goods cleared from the warehouse.

Now DDT has a few questions.

1. Why did the Board wait for one year to issue the clarification to all Commissioners?

2. Why was such an important clarification given to the Mumbai Commissioner, not made known to other Commissioners?

3. What happens now in cases where interest was not realised till now?

4. Who is responsible for the loss of Revenue/

5. And why is this circular still not published in the CBEC's web site?

6. Is it still a secret?